Corporate tax avoidance part III: Much heat, little light so far

Tax avoidance and aggressive minimisation by corporations registered in Australia and multinational corporations operating in Australia, with specific reference to: (a) the adequacy of Australia’s current laws;

(b) any need for greater transparency to deter tax avoidance and provide assurance that all companies are complying fully with Australia’s tax laws;

(c) the broader economic impacts of this behaviour, beyond the direct effect on government revenue;

(d) the opportunities to collaborate internationally and/or act unilaterally to address the problem;

(e) the performance and capability of the Australian Taxation Office (ATO) to investigate and launch litigation, in the wake of drastic budget cuts to staffing numbers;

(f) the role and performance of the Australian Securities and Investments Commission in working with corporations and supporting the ATO to protect public revenue;

(g) any relevant recommendations or issues arising from the Government’s White Paper process on the ‘Reform of Australia’s Tax System’; and

(h) any other related matters.

The matter of corporate tax avoidance was referred to the committee because of widespread concerns about the nature and prevalence of tax avoidance and aggressive tax minimisation among large Australian corporations and multinational enterprises operating in Australia.

At the time of the inquiry's initial referral in 2014, a number of reports and investigations raised concerns that large corporations operating in Australia were not 'paying their fair share' of taxation revenue. The Tax Justice Network Australia (TJNAus) released a report, Who Pays for Our Common Wealth?, which calculated that a significant proportion of the largest listed companies (ASX200) did not pay anywhere near the statutory corporate income tax level of 30 per cent. Similarly, media reports indicated that a number of multinational enterprises were using complex tax structures and arrangements to minimise the amount of tax paid on profits derived from activities in Australia.

Much of the ongoing debate about multinational tax avoidance has revolved around whether companies pay their 'fair share'. In effect, the fair share debate is based on the relative contribution of various economic actors to tax revenue. There is a perception that most Australian businesses (both large and small) and individuals contribute appropriately to the tax base, while multinationals are able to use various tax arrangements to shirk paying a level of tax that is commensurate with community standards.